Part 2: The Overtime Exemption Rules Are On Hold – What Do You Do Now?

Jane A. Kim

Part 2: The Overtime Exemption Rules Are On Hold – What Do You Do Now?

Since the Department of Labor has appealed the district court injunction of the overtime exemption rules that were scheduled to take effect earlier this month, the new rules are in limbo until the legal battle plays itself out (or the new presidential administration takes on the ultimate decision). Faced with this uncertainty, relieved employers who were unprepared for the new overtime exemption rules may feel as if they are now excused from having to make any effort to comply with the new rules, and some employers who have already transitioned employees from exempt to non-exempt or increased employees’ wages to meet the new salary level (i.e., $47,476 per year or $913 per week) may be considering whether they should roll back these changes.

In addition to the reasons employers should consider going through witha planned transition, employers who intend to wait until the dust finally settles before taking steps to comply with the new overtime exemption rules or who plan to roll back an already-implemented change, should consider the following:

The overtime exemption rules could be enforced retroactively to December 1, 2016. If the district court injunction is overturned on appeal or the rules are otherwise revised and implemented, employers may be held liable for any overtime worked by employees who would have been classified as non-exempt under the rules starting December 1, 2016 – regardless of when the rules are eventually enforced and as if the injunction had never been issued. (Employers may want to consider tracking the hours of any employees who may be reclassified if the new rules are enforced.)

Employers are not required to roll back any changes implemented in anticipation of the new rules. For the sake of employee morale (and potential administrative resources/efficiency factors), employers may want to consider maintaining already-implemented wage increases.

Roll-backs of already-implemented changes could lead to discrimination claims. Employers should carefully review all roll-backs of employees’ wages to ensure that adjustments are being applied consistently.